Tuesday, October 4, 2011

Refinancing? Compare Lender's Rates and More

Several people who live in Frederick ask me questions over the past few weeks about how to compare loan rates when refinancing.  I contacted Louise Johnson from Prime Lending to get accurate details.  In general, refinancing rates can be slightly higher than the going rates posted for first mortgages. It depends on a number of things including the equity you have in your house, credit score, plans to get cash out, etc.  I asked Louise to outline specifically what to compare between lenders. Here are the factors to carefully compare:
  1. Type of loan (apples to apples … 30 year fixed to 30 year fixed, for example)
  2. Rate
  3.  Lock in period 
  4. Local representative vs online lender
  5. Detailed estimate of fees.  Most of the fees are not controlled by the lender and some of the fees can vary depending on the title company the borrower chooses. Here are typical fees:  
  • Points and/or Origination fee (a percentage of the loan… say 1%)
  •  Appraisal fee
  • Attorney closing costs/title insurance update
  • Recording fees
  • County recordation tax
  • Escrows for tax and insurance (if applicable)
  • Lender fees (such as processing, etc)
 Get estimates from one or two reliable lenders you can trust.  Don’t take too much time comparing packages or the rates will have changed by the time you want to lock in. Try to do your research within the same day (mid afternoon is best because rates come out mid-morning, though they can change more than once a day) so you will be comparing accurately.

The Prime Lending web site has a refinancing guide that may be helpful.   Louise will also be happy to give you a no cost, no obligation, estimate as one of your lenders to compare with.  You can contact her at LJohnson@primelending.com 240-285-0757.  Hope that answers any questions you have.  Please do let me know if I can answer any other questions.

To suggest additional topics for this blog, or if you have questions, e-mail darcy@thebuyersbest.com.